Shareholder Pressure At Oxy
http://labusinessjournal.com/news/2013/apr/29/oxy-board-moves-retain-chazen-ceo/
Japanese Household Spending Up
http://www.reuters.com/article/2013/04/30/us-japan-economy-idUSBRE93T03R20130430
Flight Taxes
http://online.wsj.com/article/SB10001424127887323528404578452851588518618.html?mod=WSJ_Opinion_AboveLEFTTop
Fashion Truck In Your Future
http://www.ksdk.com/news/article/377354/3/City-forces-new-fashion-truck-off-streets-of-St-Louis
Solar Future
http://www.minyanville.com/business-news/markets/articles/Chart-of-the-Day253A-Internet-Then/4/29/2013/id/49537
Dr. Doom Speaks
http://money.cnn.com/2013/04/29/investing/roubini-stocks/index.html
This Is How Much They Hate Austerity
http://www.guardian.co.uk/business/economics-blog/2013/apr/29/austerity-kills-health-europe-us
Hidden Debt
http://www.reuters.com/article/2013/04/29/us-emerging-private-debt-idUSBRE93S0HV20130429
Facebook Versus Twitter
http://www.fool.com/investing/general/2013/04/24/twitter-is-aiming-for-facebooks-crown.aspx
Tuesday, April 30, 2013
Monday, April 29, 2013
MUCHO UNCERTAINTY
Some people, God bless 'em, you just got to love.
Bill McNabb, the CEO of Vanguard Group, is one of them. In a WSJ Opinion piece today after listing a litany of uncertainties vexing economic recovery--"regulatory policy, uncertainty about monetary policy, uncertainty about foreign policy, uncertainty about U.S. fiscal policy and the national debt," concludes his piece with this paragraph:
The good news is that if reform is enacted, and the costly pall of uncertainty is lifted, the U.S. economy has the potential to bounce back, creating the growth and jobs that are so badly needed. I am confident that our leaders in Washington can make it happen.
That's a lot of uncertainty to begin with. And you gotta love the qualifiers. Such uncertainty he goes on to say Vanguard estimates " has created a $261 billion drag on the U.S. economy."
He could've been a bit more sanguine and rounded up the number at $260 billion.
Every time Congress fails to resolve one of these issues, McNabb claims his firm receives a variety of questions like how it affects their retirements to should they just put their money in a mattress.
Anyone care to hazard how McNabb answers this last one?
Bill McNabb, the CEO of Vanguard Group, is one of them. In a WSJ Opinion piece today after listing a litany of uncertainties vexing economic recovery--"regulatory policy, uncertainty about monetary policy, uncertainty about foreign policy, uncertainty about U.S. fiscal policy and the national debt," concludes his piece with this paragraph:
The good news is that if reform is enacted, and the costly pall of uncertainty is lifted, the U.S. economy has the potential to bounce back, creating the growth and jobs that are so badly needed. I am confident that our leaders in Washington can make it happen.
That's a lot of uncertainty to begin with. And you gotta love the qualifiers. Such uncertainty he goes on to say Vanguard estimates " has created a $261 billion drag on the U.S. economy."
He could've been a bit more sanguine and rounded up the number at $260 billion.
Every time Congress fails to resolve one of these issues, McNabb claims his firm receives a variety of questions like how it affects their retirements to should they just put their money in a mattress.
Anyone care to hazard how McNabb answers this last one?
BRIEFS
Here's one of the hidden costs that increase the cost of health care bureaucrats and politicians don't want to tell you about: pushy attorneys, a legal system out of control and time demands, to name a few.
Of note is this comes from a Canadian practitioner, not some so-called greedy American doctor, where the health care system is supposed to be like my old girlfriend--so good and so fine.
http://boards.medscape.com/forums?128@708.Di81agmIflw@.2a3555a6!comment=1&cat=All
------
It's time to tell them what we want. We hate to keep bringing up the airport mess, but it's relevant. One of the basic characteristics of humans is they will expand their power to the maximum given the leaway.
Over the years the more power you give up to politicians and bureaucrats, the more they will seek to maximize that power by a factor of three. Forget party labels; that's all political BS. One of the anti-fiscal responsibility arguments centers on the political party BS. It's a sham.
Both of these groups are about one thing--self-perpetuation.
http://www.wallstreetinsightsandindictments.com/2013/04/the-tbtf-act-just-revived-the-spirit-of-glass-steagall/
------
Of note is this comes from a Canadian practitioner, not some so-called greedy American doctor, where the health care system is supposed to be like my old girlfriend--so good and so fine.
http://boards.medscape.com/forums?128@708.Di81agmIflw@.2a3555a6!comment=1&cat=All
------
It's time to tell them what we want. We hate to keep bringing up the airport mess, but it's relevant. One of the basic characteristics of humans is they will expand their power to the maximum given the leaway.
Over the years the more power you give up to politicians and bureaucrats, the more they will seek to maximize that power by a factor of three. Forget party labels; that's all political BS. One of the anti-fiscal responsibility arguments centers on the political party BS. It's a sham.
Both of these groups are about one thing--self-perpetuation.
http://www.wallstreetinsightsandindictments.com/2013/04/the-tbtf-act-just-revived-the-spirit-of-glass-steagall/
------
ONE SIDE OF THE BOAT
One side of the boat is starting to fill up.
The name of the vessel could easily be: "Could Persist For Years." That's becoming the mantra it appears for more and more money mangers quoted in financial pages. The reference is to Ben Bernanke and the Fed's next-to-zero interest rate scheme.
And a scheme is what it is, though in the British vernacular the terms carries less questionable baggage. We prefer the good old American usage, as in up to tomfoolery.
Much of this sentiment comes from the belief there's no inflation, a point of view that could turn out to be one of the biggest lies ever told. But we'll leave that for later. If the golden rule is those who hold the gold make the rules, the same holds for the CPI.
Check out chained CPI. It might be playing at a venue near you soon if certain people get their way. Without getting into a rant, the chained CPI is like the air traffic controller mess. You deserve it if you stand for it.
Dividends historically have played a large part in total return, more so at some times than others. We like dividends as well as the next fella. What we don't like is the double taxation, a government scheme in the best American usage of the term.
Again it's a question of whom do you believe. During the tech stock mania, those stocks represented a big percentage of the S&P 500 value. Same case when energy stocks soared.
Somehow these things usually find their way back to the mean.
The name of the vessel could easily be: "Could Persist For Years." That's becoming the mantra it appears for more and more money mangers quoted in financial pages. The reference is to Ben Bernanke and the Fed's next-to-zero interest rate scheme.
And a scheme is what it is, though in the British vernacular the terms carries less questionable baggage. We prefer the good old American usage, as in up to tomfoolery.
Much of this sentiment comes from the belief there's no inflation, a point of view that could turn out to be one of the biggest lies ever told. But we'll leave that for later. If the golden rule is those who hold the gold make the rules, the same holds for the CPI.
Check out chained CPI. It might be playing at a venue near you soon if certain people get their way. Without getting into a rant, the chained CPI is like the air traffic controller mess. You deserve it if you stand for it.
Dividends historically have played a large part in total return, more so at some times than others. We like dividends as well as the next fella. What we don't like is the double taxation, a government scheme in the best American usage of the term.
Again it's a question of whom do you believe. During the tech stock mania, those stocks represented a big percentage of the S&P 500 value. Same case when energy stocks soared.
Somehow these things usually find their way back to the mean.
MONDAY READS
Iranian Sanctions
http://www.reuters.com/article/2013/04/29/iran-sanctions-palmoil-idUSL4N0BZ44W20130429
Trouble In Luxembourg
http://www.testosteronepit.com/home/2013/4/26/luxembourg-is-not-the-next-cyprus-not-yet-but.html
Dollar-Yen Top? http://www.cnbc.com/id/100682468
Inside Syria
http://www.reuters.com/article/2013/04/28/us-syria-crisis-life-insight-idUSBRE93R02K20130428
Feeling The Slowdown
http://online.wsj.com/article/SB10001424127887323798104578450660680338312.html?mod=ITP_pageone_0
Data Versus Earnings
http://www.marketwatch.com/story/data-to-overtake-earnings-as-may-looms-2013-04-28
Spanish Unemployment
http://www.guardian.co.uk/commentisfree/2013/apr/28/spain-indignados-protests-state-of-mind
ECB Rate Cuts--When?
http://money.cnn.com/2013/04/29/news/economy/ecb-interest-rates/index.html
Pendulum May Be Swinging
http://online.wsj.com/article/SB10001424127887323789704578446614144636002.html?mod=WSJ_hp_mostpop_read
Trouble In Luxembourg
http://www.testosteronepit.com/home/2013/4/26/luxembourg-is-not-the-next-cyprus-not-yet-but.html
Dollar-Yen Top? http://www.cnbc.com/id/100682468
Inside Syria
http://www.reuters.com/article/2013/04/28/us-syria-crisis-life-insight-idUSBRE93R02K20130428
Feeling The Slowdown
http://online.wsj.com/article/SB10001424127887323798104578450660680338312.html?mod=ITP_pageone_0
Data Versus Earnings
http://www.marketwatch.com/story/data-to-overtake-earnings-as-may-looms-2013-04-28
Spanish Unemployment
http://www.guardian.co.uk/commentisfree/2013/apr/28/spain-indignados-protests-state-of-mind
ECB Rate Cuts--When?
http://money.cnn.com/2013/04/29/news/economy/ecb-interest-rates/index.html
Pendulum May Be Swinging
http://online.wsj.com/article/SB10001424127887323789704578446614144636002.html?mod=WSJ_hp_mostpop_read
Sunday, April 28, 2013
FULL DISCLOSURE
I was driving back from Las Vegas the day the Vioxx storm hit Merck, the giant drug maker.
At the time my partner and I had an office in Henderson, a burgeoning LV suburb, and our home base in Newport Beach. My partner had an extensive background in real estate and insurance, once having his own real estate school and multiple RE offices, before deciding to downsize and simplify life.
We split the blood, sweat and toil right down the middle at the firms. He handled the RE and I did the equity and commodity side. The bottom of the LV housing market had yet to drop. Three of our clients earlier requested a meeting to discuss timing.
All had leveraged multiple real state deals, buying up large numbers of houses to rent for the positive cash flow and later dump into strength. Variable interest rates were low and home prices were rising faster than Usain Bolt runs a 100 meters. It was a sweet, money-making deal.
A few years later things started to change. Prices were going up so fast that all of a sudden cash flows turned negative on any new deals. The low hanging fruit was all but gone. Our clients requested another meeting again to discuss timing. This time we urged them to TP&H. Take all profits and hide. And after some lively exchanges over two days, that's what they did.
For the next several months prices continued up and we caught some hell. Then one evening the Fat Lady's limousine quietly rolled into the City of Lights.
The first thing we did when we returned to the office the afternoon of the Vioxx news is start looking at Merck puts, not to buy but to sell. We knew the stock was in deep, but it would most likely survive. Remember there are no absolutes. Sometimes most likely is the best you're going to get.
Pharmaceutical research was hardly new to me. Merck had once been a $90 number with an outstanding research crew. The MSM focused, as is their want, on the short-term drama, the heart attacks and the sensational side. The bigger issue was would Merck survive and in what form and what was their defense?
Several years ago a colleague got sued by his ex-live-girl friend. It was about the money. He hired a noted female attorney. Both sides remained intractable. Three days before the case was going to trial he settled. When I asked why over lunch one day, he told me they had negotiated a lesser, known amount, even though he didn't want to give her a nickel. The trial was set for the Palm Springs area.
Then he added: "I got one of the best female attorneys around telling me the jury will probably be nine women, all housewives, and three men. She'll take the stand, start crying, talk about your wealth, and then the number if she wins is open-ended. Do you want to risk it."
Some time later he laughingly told me he got off easy. We knew Merck wasn't going to get off easy. But selling puts with a decent premium at the right time, like those houses a few years later, to get the stock possibly put to us in the high 20s and low 30s even if they cut out the dividend looked like a good risk-reward scenario.
One of the attorneys who successfully argued Merck's case at the time is now CEO. Not too long ago he persuaded the former successful head of research during Merck's glory days to come out of retirement.
Merck's like most of us, got some problems. But from where we sit, they got a lot more things going for them.
And for the sake of full disclosure, we still own some of that stock.
At the time my partner and I had an office in Henderson, a burgeoning LV suburb, and our home base in Newport Beach. My partner had an extensive background in real estate and insurance, once having his own real estate school and multiple RE offices, before deciding to downsize and simplify life.
We split the blood, sweat and toil right down the middle at the firms. He handled the RE and I did the equity and commodity side. The bottom of the LV housing market had yet to drop. Three of our clients earlier requested a meeting to discuss timing.
All had leveraged multiple real state deals, buying up large numbers of houses to rent for the positive cash flow and later dump into strength. Variable interest rates were low and home prices were rising faster than Usain Bolt runs a 100 meters. It was a sweet, money-making deal.
A few years later things started to change. Prices were going up so fast that all of a sudden cash flows turned negative on any new deals. The low hanging fruit was all but gone. Our clients requested another meeting again to discuss timing. This time we urged them to TP&H. Take all profits and hide. And after some lively exchanges over two days, that's what they did.
For the next several months prices continued up and we caught some hell. Then one evening the Fat Lady's limousine quietly rolled into the City of Lights.
The first thing we did when we returned to the office the afternoon of the Vioxx news is start looking at Merck puts, not to buy but to sell. We knew the stock was in deep, but it would most likely survive. Remember there are no absolutes. Sometimes most likely is the best you're going to get.
Pharmaceutical research was hardly new to me. Merck had once been a $90 number with an outstanding research crew. The MSM focused, as is their want, on the short-term drama, the heart attacks and the sensational side. The bigger issue was would Merck survive and in what form and what was their defense?
Several years ago a colleague got sued by his ex-live-girl friend. It was about the money. He hired a noted female attorney. Both sides remained intractable. Three days before the case was going to trial he settled. When I asked why over lunch one day, he told me they had negotiated a lesser, known amount, even though he didn't want to give her a nickel. The trial was set for the Palm Springs area.
Then he added: "I got one of the best female attorneys around telling me the jury will probably be nine women, all housewives, and three men. She'll take the stand, start crying, talk about your wealth, and then the number if she wins is open-ended. Do you want to risk it."
Some time later he laughingly told me he got off easy. We knew Merck wasn't going to get off easy. But selling puts with a decent premium at the right time, like those houses a few years later, to get the stock possibly put to us in the high 20s and low 30s even if they cut out the dividend looked like a good risk-reward scenario.
One of the attorneys who successfully argued Merck's case at the time is now CEO. Not too long ago he persuaded the former successful head of research during Merck's glory days to come out of retirement.
Merck's like most of us, got some problems. But from where we sit, they got a lot more things going for them.
And for the sake of full disclosure, we still own some of that stock.
CONTRARIAN BLOOD
If there's an ounce of contrarian blood in you, take a look at FCX and NEM, two equities that are about as unwanted as rain at a picnic. Both are near their 52 week lows. Both are in the mining and metals business, two sectors about as unwelcome as a case of the aviary flu at a chicken farm.
See YUM for the correlation there.
There's a reason for rain and there's a reason for unwanted. Meteorologists are the original hedge crowd: 30% chance of rain, sleet or indigestion after that huge Thanksgiving feast.
Meteorology has some science behind it. Key word some. Unwanted equities frequently have some science behind their status, too, the numbers. In this case, the global GDP numbers for starters. Right now they resemble my first love without make-up. I always had a thing for less attractive attractive ladies. You just know 'em when you see 'em.
See YUM for the correlation there.
There's a reason for rain and there's a reason for unwanted. Meteorologists are the original hedge crowd: 30% chance of rain, sleet or indigestion after that huge Thanksgiving feast.
Meteorology has some science behind it. Key word some. Unwanted equities frequently have some science behind their status, too, the numbers. In this case, the global GDP numbers for starters. Right now they resemble my first love without make-up. I always had a thing for less attractive attractive ladies. You just know 'em when you see 'em.
Saturday, April 27, 2013
WEEKEND READS
LA Banker And Ex-General And Syria
http://labusinessjournal.com/news/2013/apr/26/l-banker-announce-syria-reconstruction-fund/
Twin Bubbles?
http://www.futuresmag.com/2013/04/26/where-is-the-larger-bubble-sp500-index-or-us-treas?ref=hp&t=financials&page=2
Time Market Go Google
http://money.cnn.com/2013/04/26/investing/google-search-markets/index.html
The Fat Lady Hasn't Sung Yet
http://www.minyanville.com/trading-and-investing/commodities/articles/Jim-Rogers-Thinks-Gold-Will-Resume/4/26/2013/id/49504
Charts From BEA
http://www.scribd.com/document_downloads/direct/137332780?extension=pdf&ft=1367018424<=1367022034&source=embed&user_id=215643384&uahk=fmv8mK0N0rVjdcpnzmivhmT9xJY
All Things To All Folks
http://www.washingtonpost.com/blogs/post-politics/wp/2013/04/24/the-white-houses-all-of-the-above-energy-strategy-goes-global/
http://labusinessjournal.com/news/2013/apr/26/l-banker-announce-syria-reconstruction-fund/
Twin Bubbles?
http://www.futuresmag.com/2013/04/26/where-is-the-larger-bubble-sp500-index-or-us-treas?ref=hp&t=financials&page=2
Time Market Go Google
http://money.cnn.com/2013/04/26/investing/google-search-markets/index.html
The Fat Lady Hasn't Sung Yet
http://www.minyanville.com/trading-and-investing/commodities/articles/Jim-Rogers-Thinks-Gold-Will-Resume/4/26/2013/id/49504
Charts From BEA
http://www.scribd.com/document_downloads/direct/137332780?extension=pdf&ft=1367018424<=1367022034&source=embed&user_id=215643384&uahk=fmv8mK0N0rVjdcpnzmivhmT9xJY
All Things To All Folks
http://www.washingtonpost.com/blogs/post-politics/wp/2013/04/24/the-white-houses-all-of-the-above-energy-strategy-goes-global/
Friday, April 26, 2013
THE ONE YOU DON'T SEE
We just wrote a piece about Sallie Mae's bond offering recall, saying risk outweighed reward.
Another story in today's WSJ suggests the market is raising rates ahead of the Fed--as is usually the case--concerns mortgage securities backed by loans without government guarantees.
Once upon a time it was a huge market. It's a market the government hopes to rekindle for obvious reasons, not the least of which is confidence in the whole damn mortgage system.
In January premiums on deals sold as low as "0.97 percentage point for a yield of less than 2%." Like these Sallie Mae bonds, investors seem to be shying away from mortgage backed securities as more are hitting the market.
Now those mortgage securities are yielding nearly 2.6%, 1.75% premium above the interest rate benchmark. Concern centers on higher interest rates down the road. Refinancing of these mortgages has decelerated significantly. Investors don't want to get squeezed in an interest rate hike.
How much farther down the road, well, according to another story today, Bernanke and crew are already dipping their big toe into what effect an interest rate hike would have on those TBTF banks.
Stay tuned. In boxing we have a saying: it's the one you don't see that does the damage.
http://online.wsj.com/article/SB10001424127887323335404578445210965385442.html?mod=ITP_moneyandinvesting_2
Another story in today's WSJ suggests the market is raising rates ahead of the Fed--as is usually the case--concerns mortgage securities backed by loans without government guarantees.
Once upon a time it was a huge market. It's a market the government hopes to rekindle for obvious reasons, not the least of which is confidence in the whole damn mortgage system.
In January premiums on deals sold as low as "0.97 percentage point for a yield of less than 2%." Like these Sallie Mae bonds, investors seem to be shying away from mortgage backed securities as more are hitting the market.
Now those mortgage securities are yielding nearly 2.6%, 1.75% premium above the interest rate benchmark. Concern centers on higher interest rates down the road. Refinancing of these mortgages has decelerated significantly. Investors don't want to get squeezed in an interest rate hike.
How much farther down the road, well, according to another story today, Bernanke and crew are already dipping their big toe into what effect an interest rate hike would have on those TBTF banks.
Stay tuned. In boxing we have a saying: it's the one you don't see that does the damage.
http://online.wsj.com/article/SB10001424127887323335404578445210965385442.html?mod=ITP_moneyandinvesting_2
BRIEFS
Looks like Spain has caught the California disease: high unemployment and a rising exodus.
Irrespective of the reasons, it's the same message: lack of responsible leadership.
According to Spain's National Statistics Institute, unemployment hit 27.2 percent, which means it most likely even higher. Governments are not known for their being forthright when it comes to negatives news.
A record 6.2 million are out of work, the INE recently reported, and the total number escalated from 26 to 27.2 percent in the first quarter of this year.
http://www.marctomarket.com/2013/04/spain-update-running-from-bulls.html#more
------
A lot of smart people think the next bubble to go pop is student loans.
As the percentage of borrowers more than 90 days delinquent rises and concerns about these loans grow, it looks as if investors are starting to send a message: nada mas.
At least that's the message about the more risky tranches of these loans if the recently canceled Sallie Mae bond offering means anything.
These bonds offer higher yields in the main, but those yields depends on how they get packaged. Sallie Mae, the largest non-government student lender, on Thursday had to recall an offering that had been on the market for two weeks owing to lack of interest.
Market translation: not enough reward for level of risk.
http://online.wsj.com/article/SB10001424127887323335404578444832431703020.html?KEYWORDS=sallie+mae
-----
Irrespective of the reasons, it's the same message: lack of responsible leadership.
According to Spain's National Statistics Institute, unemployment hit 27.2 percent, which means it most likely even higher. Governments are not known for their being forthright when it comes to negatives news.
A record 6.2 million are out of work, the INE recently reported, and the total number escalated from 26 to 27.2 percent in the first quarter of this year.
http://www.marctomarket.com/2013/04/spain-update-running-from-bulls.html#more
------
A lot of smart people think the next bubble to go pop is student loans.
As the percentage of borrowers more than 90 days delinquent rises and concerns about these loans grow, it looks as if investors are starting to send a message: nada mas.
At least that's the message about the more risky tranches of these loans if the recently canceled Sallie Mae bond offering means anything.
These bonds offer higher yields in the main, but those yields depends on how they get packaged. Sallie Mae, the largest non-government student lender, on Thursday had to recall an offering that had been on the market for two weeks owing to lack of interest.
Market translation: not enough reward for level of risk.
http://online.wsj.com/article/SB10001424127887323335404578444832431703020.html?KEYWORDS=sallie+mae
-----
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